Changing market dynamics push CVR Energy to resume renewable diesel project in Wynnewood

CVR Energy Inc. is resuming plans to convert a hydrocracker at its Wynnewood, Oklahoma, petroleum refinery to manufacture renewable diesel after delaying the project earlier this year due to high soybean oil prices.

“With the recent increase in crude oil and diesel prices, the HOBO (heating oil/bean oil) spread improved, and basis for refined, bleached, and deodorized soybean oil and corn oil has subsided,” said David Lamp, president and CEO of CVR Energy, in a third-quarter-earnings call in early November.

The company will complete the conversion in spring 2022 with an anticipated start-up of renewable diesel production in mid-April. The capacity of the Wynnewood renewable diesel unit will be close to 100 million gallons a year (mgy).

CVR Energy will use soybean oil and treated corn oil initially until its feedstock pretreatment unit on site is complete and operational, which Lamp said is on track for late 2022. He said equipment with long lead times for the $60 million pretreatment unit is on order.

“The unit is designed to match the capacity of the renewable diesel unit, which is 7,300 barrels a day or a little under 100 million gallons a year of renewable diesel,” Lamp said. “It’s designed to handle any type of feedstock we can throw at it, with some limitations—but not many.”

While Lamp did not go into detail on feedstock contracts, he said all options, including joint ventures and capital investments in crush projects, are on the table.

“Crushers are reasonable projects to us,” Lamp said. “The problem with the whole waste market is its a thinly traded market. There’s no liquidity. As more refiners get into this, the ability to trade between partners and competitors is important to have. Getting a base supply of oil off the crushers is key to making this happen.”

Engineering for the Coffeyville, Kansas, refinery conversion is still ongoing. This project would produce more renewable diesel than Wynnewood, in addition to sustainable aviation fuel (SAF). Total renewable fuel production in Coffeyville is being scaled at 150 mgy, with 25 mgy of that slated to be SAF. Lamp said regulatory environment right now is not suitable for CVR Energy to make a big commitment to produce SAF, as “substantial subsidies” are needed to make it more economically feasible.

He added that for CVR Energy to commit to the Coffeyville conversion, “a few other states need to implement a low carbon fuel standard” because “the 7 billion existing gallons in the works will consume all those credits” from low-carbon policies in California, Oregon, and Washington. “We need more demand,” he said.